BILL ANALYSIS
AB 819
Page 1
ASSEMBLY THIRD READING
AB 819 (Charles Calderon)
As Amended June 1, 2009
2/3 vote. Urgency
PUBLIC SAFETY 7-0 APPROPRIATIONS 12-5
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|Ayes:|Solorio, Hagman, |Ayes:|De Leon, Ammiano, Charles |
| |Furutani, Gilmore, Hill, | |Calderon, Davis, Fuentes, |
| |Ma, Skinner | |Hall, John A. Perez, |
| | | |Price, Skinner, Solorio, |
| | | |Torlakson, Krekorian |
| | | | |
|-----+--------------------------+-----+---------------------------|
| | |Nays:|Nielsen, Duvall, Harkey, |
| | | |Miller, |
| | | |Audra Strickland |
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SUMMARY : Creates the Intellectual Property Piracy Prevention
and Prosecution (IPPPP) Program to fund grants for local law
enforcement and district attorneys for the purposes of
preventing and prosecuting intellectual property piracy.
Specifically, this bill :
1)Removes the creation and distribution of counterfeit software
and pirated sound recordings from the list of high technology
crimes to be under the purview of the High Technology Crime
Advisory Committee (HTCAC).
2)Establishes the IPPPP Act of 2009.
3)Finds and declares the following:
a) According to a 2007 study by the Institute for Policy
Innovation, intellectual property piracy, meaning the theft
of movies, music, software, and video games, costs the
United States economy $58 billion each year;
b) The problem of intellectual property piracy continues to
grow worse. A 2005 Gallup study found that 5% of Americans
had purchased, copied, or downloaded counterfeit music in
the preceding year. By 2007, this number had jumped to 9%.
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The percentage of respondents that admitted buying a
pirated movie rose from 3% in 2005 to 6% in 2007. At the
same time, once robust DVD sales have flattened over the
past few years, while CD shipments to retailers have
plummeted;
c) The effect of intellectual property piracy on California
and its citizens is particularly dire. Intellectual
property piracy adversely affects the California economy,
eliminates jobs, and damages industry. According to the
Business Software Alliance, in 2003, software piracy alone
cost the California economy more than 13,000 jobs, over
$802 million in wages and salaries, over $1 billion in
retail sales of business software applications, and roughly
$239 million in total tax losses. This act will send a
strong signal that California is committed to protecting
the intellectual property created by California's
innovation and entertainment industries;
d) By creating a technical advisory committee, California
will be able to draw upon the expertise and insight of
those on the front lines of the anti-piracy effort;
e) Grants awarded pursuant to this act will be used to
foster innovation and to provide local law enforcement and
prosecutors the tools they need to effectively fight
intellectual property piracy; and,
f) Finally, by safeguarding the legitimate sale of
intellectual property, California will increase its tax
base, and stimulate the economy.
4)Mandates that funds provided under this program are intended
to ensure that law enforcement and prosecutors are equipped
with the necessary personnel and equipment to combat
successfully intellectual property piracy, which includes
piracy of movies, music, software, and video games.
5)Creates within the Department of Justice (DOJ), a program of
financial assistance for law enforcement and district
attorneys' offices, designated the IPPPP Program. Upon
appropriation by the Legislature, all funds appropriated to
the DOJ for the purposes of this chapter shall be administered
and disbursed by the Attorney General (AG) in consultation
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with the IPPPP Advisory Committee as established.
6)Provides that all funds designated for use for purposes of
this chapter shall be deposited in the IPPPP Fund, which is
hereby established. The fund shall be under the direction and
control of the office of the AG.
7)Requires the advisory committee to review grant applications
and, on a majority vote of the membership, submit those
applications to the AG for formal approval.
8)States that the advisory committee shall monitor and audit the
use of grant funds.
9)Necessitates that grant money must be used exclusively to
combat intellectual property piracy within California. Grants
shall be made on an annual basis, and may not be used to pay
existing staff, absent extraordinary circumstances and
approval by the AG. Grant recipients may receive funding for
no more than three years without submitting another grant
application. Grants shall only be made to applicants with an
existing budget dedicated to fighting intellectual property
piracy.
10)Demands that in order to receive a grant, prospective
recipients shall agree in writing to the following terms, as
conditions of receiving a grant:
a) The recipient is authorized to accept grant funds under
all applicable state and local laws;
b) The recipient will vigilantly safeguard grant funds and
ensure that use of the grant funds fully comports with the
purposes specified in the application for the grant funds,
as approved or modified by the advisory committee;
c) Grant funds shall be used to augment, but shall not be
used to supplant, a grant recipient's budget;
d) If the grant funds are used for the purpose of
investigation, litigation, or prosecution, any remedy,
settlement, judgment, or restitution award shall provide
for full reimbursement to the IPPPP Fund of all grant funds
used for that investigation, litigation, or prosecution;
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e) The recipient shall notify the advisory committee in
writing of litigation or prosecution results, including any
settlement, judgment, or other resolution, within 30 days;
f) The recipient shall notify the advisory committee in
writing of the status of all outstanding investigations,
litigation, or prosecutions funded in whole or in part by
the grant six months after the funds are disbursed, and
every 12 months thereafter until all disbursed funds have
been expended and reported on;
g) The recipient shall fully cooperate with the advisory
committee and its agents in providing all information and
documents concerning the use of grant funds;
h) Except as otherwise expressly agreed by the advisory
committee, within 60 days after the conclusion of the
investigation, litigation, or prosecution, training, or
other activity for which the disbursement was awarded, the
recipient shall return all unused funds to the advisory
committee by check made payable to the IPPPP Fund;
i) If grant funds are used for the production of any
materials, the recipient shall permit the AG's Office and
the advisory committee to use and distribute those
materials without restriction for their intended purposes;
and,
j) The advisory committee is authorized to audit, review,
and inspect the recipient's activities, books, documents,
papers, and records during the project and thereafter for
three years following the final allocation of funds.
11)Establishes the IPPPP Advisory Committee for the purpose of
formulating a comprehensive written strategy for addressing
intellectual property piracy prevention and prosecution
throughout California, and to advise the AG on the appropriate
disbursement of funds to local law enforcement agencies and
district attorneys' offices.
12)Requires the IPPPP Advisory Committee to identify various
priorities for law enforcement attention regarding the
following:
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a) The apprehension and prosecution of criminal
organizations, networks, and groups of individuals engaged
in the theft of, counterfeiting of, or unauthorized
distribution, sale, or reproduction of, the following types
of intellectual property:
i) Movies;
ii) Music;
iii) Computer software; and,
iv) Video games.
b) The investigation and prosecution of violations of
criminal and civil provisions of law; and,
c) The advising of local law enforcement and district
attorneys regarding current aspects of intellectual
property piracy, in order to respond quickly to the most
serious threats of piracy.
13)Asks the IPPPP Advisory Committee to meet at least four times
per year, shall consist of 10 members, of whom six shall be
appointed by the Governor, two by the Speaker of the Assembly,
and two by the Senate Committee on Rules. Members shall be
paid $100 per diem for each meeting, as well as all necessary
travel expenses. The advisory committee shall be composed of
the following members:
a) At least two representatives of the general public;
b) At least one representative with demonstrable knowledge
of the movie industry;
c) At least one representative with demonstrable knowledge
of the music industry;
d) At least one representative with demonstrable knowledge
of the computer software industry;
e) At least one representative with demonstrable knowledge
of the video gaming industry;
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f) At least one representative with experience in law
enforcement, specifically relating to intellectual property
piracy offenses; and,
g) At least one representative with experience prosecuting
intellectual property piracy offenses at the local, state,
or federal level.
14)Proscribes that in deciding which grant applications to fund,
the IPPPP Advisory Committee shall consider the following
factors:
a) The purpose for which the funds are sought;
b) The proposal's specificity, including whether the
proposal identifies anticipated costs, along with materials
and personnel to be used;
c) The anticipated public benefit;
d) The ability of the advisory committee to audit the use
of the funds; and,
e) The number, amount, and use of previous grants awarded
to the prospective recipient, if any.
15)Entitles members of the IPPPP Advisory Committee to the same
immunity from liability that is provided to public employees.
16)Provides that this act shall become operative only if an
appropriation is provided for its operation.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, no direct state cost as implementation of this act is
contingent upon a subsequent appropriation. Potential cost
pressure in the millions of dollars to fund the IPPPP.
COMMENTS : According to the author, "California remains the
capital of the motion picture and television industry as well as
a center for the recording and software industries. In terms of
economic activity, television and movies generated a total of
$42.2 billion, split almost equally between payroll expenditures
and payments to vendors. Approximately 266,000 people were
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directly employed in the motion picture and television industry
in California, with an average salary of $80,600. When indirect
employment resulting from the industry is factored in, the
number of people working in California as a result of television
and movies totals over 500,000.
"Although piracy is a global problem, a recent study by the Los
Angeles County Economic Development Corporation (LAEDC) notes
that it affects the Los Angeles region disproportionately due to
the concentration of the entertainment industry there. LAEDC
estimates that in 2005 losses to the motion picture industry
from piracy were $2.7 billion; the sound recording industry $851
million; software publishing $355 million.
"Not only is digital piracy a direct threat to the industry, but
its effects are felt by state and local government in the form
of lost tax revenues.
"According to the same LAEDC study, piracy affecting the
entertainment industry just in Los Angeles cost nearly $134
million in state income taxes; $63.5 million in sales taxes; $2
million in Los Angeles City business taxes.
"This is not just a Los Angeles problem.
"Digital piracy reaches across the state, affecting the Silicon
Valley and its computer industry. According to the Business
Software Alliance, in 2003, software piracy alone cost the
California economy more than 13,000 jobs, $802 million in wages
and salaries, over $1 billion in retail sales of business
software applications, and roughly $239 million in total tax
losses."
Please see the policy committee for a full discussion of this
bill.
Analysis Prepared by : Nicole J. Hanson / PUB. S. / (916)
319-3744
FN: 0001271